In Re: Crescent Energy Services, Llc

MOTION for Summary Judgment

E.D. La.December 12, 2016

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA IN THE MATTER OF THE CIVIL ACTION NO: 2:15-cv-00819 COMPLAINT OF CRESCENT ENERGY SERVICES, LLC, AS OWNER SECTION H (1) AND OPERATOR OF THE S/B OB 808, FOR EXONERATION FROM OR JUDGE JANE TRICHE MILAZZO LIMITATION OF LIABILITY MAGISTRATE VAN MEERVELD MOTION FOR SUMMARY JUDGMENT NOW INTO COURT, through undersigned counsel, comes Starr Indemnity & Liability Company, third party defendant herein, who, moves for Summary Judgment for the reasons as set forth in the Memorandum in Support of the instant Motion. Respectfully submitted, S/RICHARD A. COZAD RICHARD A. COZAD, T.A. (#4537) MICHAEL L. McALPINE, (#9195) FRANKLIN H. JONES, (#7480) RACHEL L. BRADLEY (#34644) McALPINE & COZAD 365 Canal Street, Suite 2730 New Orleans, LA 70130 Tel. (504) 561-0323 / Fax (504) 528-9442 Attorneys for Starr Indemnity & Liability Company Case 2:15-cv-00819-JTM-JVM Document 307 Filed 12/12/16 Page 1 of 2 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a the foregoing document was filed with the Clerk of Court on December 12, 2016, and is available for viewing and downloading from the CM/ECF system. Notice of Electronic Case Filing has been sent automatically to all counsel on the e-mail service list. Any counsel not included on the e-mail service list received a copy via United States Mail. S/RICHARD A. COZAD 130163 Case 2:15-cv-00819-JTM-JVM Document 307 Filed 12/12/16 Page 2 of 2 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA IN THE MATTER OF THE CIVIL ACTION NO: 2:15-cv-00819 COMPLAINT OF CRESCENT ENERGY SERVICES, LLC, AS OWNER SECTION h (1) AND OPERATOR OF THE S/B OB 808, FOR EXONERATION FROM OR JUDGE JANE TRICHE MILAZZO LIMITATION OF LIABILITY MAGISTRATE VAN MEERVELD MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT MAY IT PLEASE THE COURT: This limitation proceeding involves a claim for bodily injuries sustained by Corday Shoulder, a pump operator employed by Crescent Energy Services (“CES” or “Crescent”). While participating in decommissioning an inland waterway oil well owned and operated by Carrizo, LLC (“Carrizo”), claimant was injured when a line pipe or nipple, which was under pressure from the well, blew out from a flange on the wellhead, striking him in the leg. As a consequence of the injury, Mr. Shoulder underwent a below the knee surgical amputation of his left leg. In response to the casualty, Crescent filed a limitation of liability proceeding in this Honorable Court. Claims were filed in the limitation by both Mr. Shoulder and Carrizo. In addition, Carrizo has filed a Cross Claim against Crescent and a Third Party Claim against Crescent’s insurers, Liberty International Underwriters (“LIU” - Primary General Liability insuror), Llyod’s Underwriters (“Lloyd’s - Marine Hull insuror) and Starr Indemnity and Liability Company (“Starr” - Umbrella insuror) alleging that it is entitled to contractual indemnity from Crescent and coverage as an additional assured on the LIU, Lloyd’s and Starr policies issued to Crescent. Crescent, Starr and LIU Case 2:15-cv-00819-JTM-JVM Document 307-1 Filed 12/12/16 Page 1 of 7 have answered the Cross Claim/Third Party Demands, denying the contractual indemnity/additional assured claims. FACTUAL SUMMARY Carrizo owned and operated certain wells located in the inland waters of South Louisiana, specifically, in Lafourche Parish. At some time prior to Mr. Shoulder’s accident, Carrizo ceased production of oil and/or gas from those wells. In accordance with Louisiana Law, once a decision to stop production was made, Carrizo was obliged to fully decommission the wells which involved a plug and abandonment (P&A) procedure. Carrizo petitioned the Louisiana Department of Conservation for a permit to P&A the involved wells, which permission was granted by the Department of Conservation pursuant to Permit No: 233130 for Carrizo’s “Delta Well No. 3". See Exhibit No. 3. Carrizo contracted with Crescent to perform the decommissioning operation, as evidenced by a Master Service Agreement (“MSA”) entered into between the parties on February 5, 2015. See Exhibit 1 attached. The MSA stipulates that Carrizo is engaged in the business of production of oil and gas and that it owns and operates certain oil and gas wells. Exhibit 1, supra. Following execution of the contract, Crescent dispatched a decommissioning crew to plug and abandon Crescent’s Delta Well Nos. 1, 2 and 3. The Crescent crew brought with them certain tools and equipment to be utilized in the decommissioning process, which included its spud barge, the OB 808 which was to be situated adjacent to the well structures to act as a work platform during the course of the decommissioning. On February 13, 2015, the Crescent crew was preparing the casing in Carrizo’s Delta Well No. 3 for cementing as an element of the decommissioning project. The wellhead was accessed by means of a wooden platform built around the well’s “Christmas Tree”. See Exhibit No. 2. However, Case 2:15-cv-00819-JTM-JVM Document 307-1 Filed 12/12/16 Page 2 of 7 before the cementing could commence, any downhole pressure in the well had to be released. Accordingly, Mr. Shoulder secured a “line pipe” (or “nipple”) with a ball valve and hose attached to the flange adjacent to the valve which gave access to the section of the casing that was to be cemented. The valve on the well would then be opened and the release of pressure would be modulated through the line pipe and ball valve installed by the Crescent crew. All these activities were taking place on the well jacket. As Mr. Shoulder was positioned adjacent to the end of the flange, the line pipe suddenly blew off the well head striking him in the leg and knocking him into the water below. The line pipe and ball valve were unable to be recovered from the waterway. However, the flange from the Carrizo well has been retained and there is argument that its threads were corroded such that it would not allow sufficient seating of the Crescent line pipe so as to be able to withstand the pressure being released from the well, thereby causing it to dislodge under pressure and strike the claimant. ISSUE Initially, Starr agrees and joins with Carrizo relative to Carrizo’s Motion for Summary Judgment,1 and addressing interpretation of the Lloyd’s policy as it pertains to coverage for Carrizo’s contractual/additional assured claims.2 However, Starr wishes to address another issue concerning the Lloyd’s policy. Lloyd’s has argued that its policy does not provide coverage for seaman, like Shoulder, under a notation in the Declarations Page of the policy. However, the policy language itself specifically provides in pertinent part 1 See Rec. Doc. 306-4 2 Reserving at all times Starr’s continued belief that the Carrizo/Crescent contract is non-maritime in nature and thus subject to the Louisiana Oilfield Anti-Indemnity Act. La. Rev. Stat. 9:270. Case 2:15-cv-00819-JTM-JVM Document 307-1 Filed 12/12/16 Page 3 of 7 The Assurer hereby undertakes to make good to the Assured or the Assured’s executors, administrators and/or successors, all such loss and/or damage and/or expense as the Assured as owners of the vessel named herein have become liable to pay and shall pay on account of the liabilities, risks, events, and/or happenings set forth: 1. Liability for loss of life of, or personal injury to, or illness of any person, excluding, however, unless otherwise agreed to by endorsement hereon, liability under any Compensation Act to any employee of the Assured, (other than a seaman) or in case of death the his beneficiaries or others. ********* For any loss, damage, or expense arising out of or having relation to the towage of any other vessel or raft, whether under agreement or not, unless such towage was to assist such other vessel ro craft in distress to a port or place of safety, provided, however, that this clause shall not apply to claims under this policy for loss of life or personal injury to passengers and/or members of the crew of the vessel named herein arising as a result of towing. See generally Exhibit “A” to Carrizo’s Motion for Summary Judgment, Rec. Doc. No. 306 (emphasis in the original). As the above language suggests, the policy, like most Protection and Indemnity policies provides coverage for seaman’s claims, with the exception of claims arising as a result of towage. The policy includes a “Choice of Law and Jurisdiction” provision, which states that “in case of any dispute arising out of this insurance, the same shall be governed by and construed in accordance with Louisiana law and practice.” Starr suggests the facts of this case and the law applicable thereto favor the finding of coverage for this matter under the Lloyd’s policy for the claims of Mr. Shoulder. SUMMARY JUDGMENT STANDARD Summary judgment shall be granted if the record and evidence presented show there is no genuine issue related to any material fact and that the moving party is entitled to judgment in its favor as a matter of law. Fed.R.Civ.P. 56(a); Beard v. Banks, 548 U.S. 521 (2006). The moving party must demonstrate by competent evidence that no issue of material fact exists. Burden v. Case 2:15-cv-00819-JTM-JVM Document 307-1 Filed 12/12/16 Page 4 of 7 General Dynamics Corp, 60 F.3d 213 (5th Cir. 1995); Norman v. Apache Corp., 19 F.3d 1017 (5th Cir. 1994). The non-moving party then has the burden of showing the existence of a specific disputed factual issue. Celotex Corp. v. Catrett, 477 U.S. 317 (1986). “When a contract can be construed from the four corners of the instrument without looking to extrinsic evidence, the question of contractual interpretation is answered as a matter of law and summary judgment is appropriate.” Peterson v. Schimek, 729 So.2d 1024, 1029 (La. 3/2/99). LAW AND ARGUMENT A. The Lloyd’s Policy Provides Coverage under Basic Contract Interpretation Under the four corners of the Lloyd’s policy, the Lloyd’s policy provides coverage for the incident giving rise to this litigation. “An insurance policy is a conventional obligation that constitutes the law between the insured and the insurer, and the agreement governs the nature of their relationship.” Peterson v. Schimek, 729 So.2d 1024, 1028 (La. 3/2/99)(citing La. Civ. Code Art. 1983). Courts “should interpret insurance policies the same way they do other contracts by using the general rules of contract interpretation.” Id. Insurance contracts “should be interpreted to effect, not deny, coverage.” Id. “The extent of coverage is determined from the intent of the parties as reflected by the words of the insurance policy.” Id. “When the words of an insurance contract are clear and explicit and lead to no absurd consequences, courts must enforce the contract as written and make no further interpretation in search of the parties’ intent.” Id. The language located in Paragraph 1 of the Lloyd’s policy are clear and explicit: coverage does not extend the employees of the Assured other than seaman. Under basic contract interpretation, the policy language provides coverage for the incident giving rise to this litigation as plaintiff is a seaman. Case 2:15-cv-00819-JTM-JVM Document 307-1 Filed 12/12/16 Page 5 of 7 B. If the Policy is Ambiguous, which Starr Denies, Then It Must be Construed in Favor of Coverage. If the varying provisions located in the Declarations Page and within the policy itself render the Lloyd’s policy ambiguous, which Starr denies, then the policy must be construed against the insurer and in favor of coverage. “Ambiguity in an insurance policy must be resolved construing the policy as a whole; one policy provision is not to be construed separately at the expense of disregarding other policy provisions.” Billiot v. Terrebonne Parish Sheriff;s Office, 735 So.2d 17, 24 (La.App 1 Cir. 2/19/99). After applying the other general rules of construction, if an ambiguity remains, the ambiguous contractual provision is to be construed against the drafter, or, as understood in the insurance context, in favor of the insured. This rule of strict construction requires the ambiguous policy provisions be construed against the insurer who issued the policy and in favor or coverage to the insured. Id. If ambiguity exists as the language within the policy provides coverage for liability for injury to a seaman like plaintiff and the Declarations Page lists an exclusion to that very coverage without support or endorsement, then the policy must be interpreted so as to provide the coverage outlined in Paragraph 1 of the Protection and Indemnity Section of the policy under Louisiana law. In conclusion, Starr respectfully requests that this Honorable Court grant its Motion for Summary Judgment determining that the Lloyd’s Marine policy, with pertinent excerpted sections attached as Exhibit “A” hereto3, provides coverage for liability for the injuries of seaman such as plaintiff, Corday Shoulder, as the policy contains clear and explicit language that such coverage exists. In the alternative, if this Court finds that the policy is ambiguous as to coverage based on the unsupported reference listed on the Declarations Page of the policy, which Starr denies, then the 3 Declarations Page of Lloyd’s Policy; first page of Protection and Indemnity section of Lloyd’s Policy; and last two pages of SP.23 Form with bold language which disallows coverage for bodily injury of passengers and crew solely as a result of towing, which demonstrates the policy’s intent to provide coverage as a result of events other than towing. Case 2:15-cv-00819-JTM-JVM Document 307-1 Filed 12/12/16 Page 6 of 7 policy must be interpreted in favor of coverage under Louisiana law. Respectfully submitted, S/RICHARD A. COZAD RICHARD A. COZAD, T.A. (#4537) MICHAEL L. McALPINE, (#9195) FRANKLIN H. JONES, (#7480) RACHEL L. BRADLEY (#34644) McALPINE & COZAD 365 Canal Street, Suite 2730 New Orleans, LA 70130 Tel. (504) 561-0323 / Fax (504) 528-9442 Attorneys for Starr Indemnity & Liability Company CERTIFICATE OF SERVICE I HEREBY CERTIFY that a the foregoing document was filed with the Clerk of Court on December 12, 2016, and is available for viewing and downloading from the CM/ECF system. Notice of Electronic Case Filing has been sent automatically to all counsel on the e-mail service list. Any counsel not included on the e-mail service list received a copy via United States Mail. S/RICHARD A. COZAD 130165 Case 2:15-cv-00819-JTM-JVM Document 307-1 Filed 12/12/16 Page 7 of 7 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA IN THE MATTER OF THE CIVIL ACTION NO: 2:15-cv-00819 COMPLAINT OF CRESCENT ENERGY SERVICES, LLC, AS OWNER SECTION H (1) AND OPERATOR OF THE S/B OB 808, FOR EXONERATION FROM OR JUDGE JANE TRICHE MILAZZO LIMITATION OF LIABILITY MAGISTRATE VAN MEERVELD NOTICE OF SUBMISSION PLEASE TAKE NOTICE that Starr Indemnity & Liability Company’s Motion for Summary Judgment will be submitted for consideration to the Honorable Jane Milazzo, Judge, United States District Court for the Eastern District of Louisiana, 500 Poydras Street, New Orleans, Louisiana 70130, on the 28th day of December, 2016 at 9:30 a.m. S/RICHARD A. COZAD RICHARD A. COZAD, T.A. (#4537) MICHAEL L. McALPINE, (#9195) FRANKLIN H. JONES, (#7480) RACHEL L. BRADLEY (#34644) McALPINE & COZAD 365 Canal Street, Suite 2730 New Orleans, LA 70130 Tel. (504) 561-0323 / Fax (504) 528-9442 Attorneys for Starr Indemnity & Liability Company Case 2:15-cv-00819-JTM-JVM Document 307-2 Filed 12/12/16 Page 1 of 2 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a the foregoing document was filed with the Clerk of Court on December 12, 2016, and is available for viewing and downloading from the CM/ECF system. Notice of Electronic Case Filing has been sent automatically to all counsel on the e-mail service list. Any counsel not included on the e-mail service list received a copy via United States Mail. S/RICHARD A. COZAD 130161 Case 2:15-cv-00819-JTM-JVM Document 307-2 Filed 12/12/16 Page 2 of 2 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA IN THE MATTER OF THE CIVIL ACTION NO: 2:15-cv-00819 COMPLAINT OF CRESCENT c/w 15-5783 ENERGY SERVICES, LLC, AS OWNER SECTION H (1) AND OPERATOR OF THE S/B OB 808, FOR EXONERATION FROM OR JUDGE JANE TRICHE MILAZZO LIMITATION OF LIABILITY MAGISTRATE VAN MEERVELD (Applies to all consolidated matters) ORDER Considering the foregoing Motion for Summary Judgment by Starr Indemnity & Liability Company, and the law and evidence being in favor thereof: IT IS ORDERED that the Motion for Summary Judgment be and is hereby GRANTED. At New Orleans, Louisiana this ____ day of _________________, 2016. __________________________________________ THE HONORABLE JANE TRICHE MILAZZO UNITED STATES DISTRICT COURT JUDGE 130162 Case 2:15-cv-00819-JTM-JVM Document 307-3 Filed 12/12/16 Page 1 of 1 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA IN THE MATTER OF THE CIVIL ACTION NO: 2:15-cv-00819 COMPLAINT OF CRESCENT c/w 15-5783 ENERGY SERVICES, LLC, AS OWNER SECTION H (1) AND OPERATOR OF THE S/B OB 808, FOR EXONERATION FROM OR JUDGE JANE MILAZZO LIMITATION OF LIABILITY MAGISTRATE VAN MEERVELD (Applies to all consolidated matters) STATEMENT OF UNCONTESTED MATERIAL FACTS NOW INTO COURT, through undersigned counsel, comes Starr Indemnity & Liability Company (hereinafter referred to, at times, as “Starr”), who submits the following as uncontested facts material to Starr’s Motion for Summary Judgment. 1. A Marine Hull Insurance policy, numbered B0507 M15PH06410, was in effect between July 27, 2015 to July 27, 2016. 2. Plaintiff Corday Shoulder is a Jones Act seaman. 3. Paragraph 1 of Marine Hull Insurance policy, numbered B0507 M15PH06410, under Protection and Indemnity excepts “seaman” from any exclusions pertaining the Assured’s employees. 4. No endorsement of the Marine Hull Insurance policy, numbered B0507 M15PH06410, modifies or limits Paragraph 1 under Protection and Indemnity. 5. The Declarations Page of the Marine Hull Insurance policy, numbered B0507 M15PH06410, is not an endorsement. Case 2:15-cv-00819-JTM-JVM Document 307-4 Filed 12/12/16 Page 1 of 2 Respectfully submitted, S/RICHARD A. COZAD RICHARD A. COZAD, T.A. (#4537) MICHAEL L. McALPINE, (#9195) FRANKLIN H. JONES, (#7480) RACHEL L. BRADLEY (#34644) McALPINE & COZAD 365 Canal Street, Suite 2730 New Orleans, LA 70130 Tel. (504) 561-0323 / Fax (504) 528-9442 Attorneys for Starr Indemnity & Liability Company CERTIFICATE OF SERVICE I HEREBY CERTIFY that a the foregoing document was filed with the Clerk of Court on December 12, 2016, and is available for viewing and downloading from the CM/ECF system. Notice of Electronic Case Filing has been sent automatically to all counsel on the e-mail service list. Any counsel not included on the e-mail service list received a copy via United States Mail. S/RICHARD A. COZAD 130164 Case 2:15-cv-00819-JTM-JVM Document 307-4 Filed 12/12/16 Page 2 of 2 Case 2:15-cv-00819-JTM-JVM Document 307-5 Filed 12/12/16 Page 1 of 4 Case 2:15-cv-00819-JTM-JVM Document 307-5 Filed 12/12/16 Page 2 of 4 Case 2:15-cv-00819-JTM-JVM Document 307-5 Filed 12/12/16 Page 3 of 4 Case 2:15-cv-00819-JTM-JVM Document 307-5 Filed 12/12/16 Page 4 of 4